PJM Interconnection, largest US electrical grid, may disconnect data centers to prevent blackouts amid record demand

The largest electrical grid in the U.S. has struggled to cope with an onslaught of data centers. After an auction to add more generating capacity fell short, PJM Interconnection, the grid's operator, has announced it will curtail power to data centers and other large users during power shortages.

This decision reflects the breakneck pace of data center construction, which has left grid operators scrambling to generate power. By 2035, data centers are expected to use 4x more electricity than they do today.

PJM will not begin curtailing supply until June 2027, and the cuts will apply only to data centers of 50 megawatts or larger. The grid operator is running another auction for new generating capacity.

Like existing demand response programs—which have been in place for decades and typically involve large industrial users such as manufacturers—customers facing power cuts will be compensated. These programs typically provide advance notice ranging from 30 minutes to a few days, depending on forecasted demand.

The move will likely incentivize many new data centers, and potentially existing ones, to install their own on-site power sources. Those that don't will probably rely on backup generators, which tend to be costlier to operate and frequently more polluting.

Many data centers favor diesel generators, as the fuel is widely available and can be stored on-site. Federal regulations allow such generators to be used for up to 50 hours per year for demand response events, and up to 100 hours per year for emergencies and maintenance.

This week, Vantage Data Centers came under fire for its apparent coordination with Virginia environmental regulators to cast doubt on a report concluding that diesel backup generators could contribute to tens of millions of dollars in annual health damages for residents living near a 96 megawatt data center in Northern Virginia.

PJM has faced scrutiny in recent months over how it manages new generating capacity and large new users, including data centers. The grid operator's territory spans from Virginia to Illinois and serves 67 million customers. Over the past year, wholesale electricity prices have nearly doubled, and PJM's independent market monitor attributed much of the increase to data centers.